The European Union, the world's second largest market, offers huge opportunities but Indonesian exporters have failed to tap this potential because of their inability to meet market requirements.

"If Indonesian exporters want to increase their market share in the European Union, they need to acknowledge their handicaps, formulate strategies and change these handicaps into opportunities," Trade Minister Mari Elka Pangestu said during a seminar in Jakarta on Wednesday.

The Centre for Strategic and International Studies (CSIS), which hosted the seminar on the Challenges and Opportunities of the European Union Market, presented data from the Commodity Trade Statistics Database (Comtrade) showing that Indonesia's share of EU's imports declined to 0.39 percent in 2004 from 0.47 percent in 2001 and 0.49 percent in 1998.

Indonesian exports to the EU, according to the Central Statistics Agency, reached US$9.01 billion in 2004 and $8.21 billion in 2003.

Mari said one of the main obstacles encountered by Indonesian exporters was their inability to adjust to changing market requirements and regulations in the EU.

The country's exports to the EU face both tariff and non-tariff barriers, such as eco-labeling.

"Both the government and the private sector have to keep up with the (rule) changes and make the necessary adjustments," Mari said.

CSIS researcher Imelda Maidir said Indonesian exporters also failed to match their products with potential demand in the EU market.

The products that have the most potential in the EU include tobacco, coal and briquettes, cork and wood, live animals, chiefly for food, medicinal and pharmaceutical products, travel goods and handbags, fish, footwear, iron and steel, and power generating machinery and equipment.

"But Indonesian exporters only supply two -- coal and footwear -- of the top 10 potential products demanded in the EU market," she said.

In addition to coal and footwear, Indonesia also exports textiles and clothing, telecommunication and sound recording equipment, furniture and parts, vegetable oils and fats, and electrical machinery, the minister said.

To help bridge the regulation gap between exporters and the EU market, Mari said her ministry would continue holding meetings with exporters.

"We will share information on regulations in the EU market and explain their implications to exporters, so that they can adjust," she said.

According to a CSIS survey conducted over the past year, export companies have not received adequate information on EU market developments from the government.

Of 37 exporters surveyed, only 13.5 percent said they received information about the market from the government, 21.6 percent from their own business networks, 18.9 percent from the Internet and 5.4 percent from business associations. (07)